News | 19th Sep, 2011

Axe Latrobe Valley power plant grant

Monday, 19 September 2011
Adam Morton, The Age

A coal and gas-fuelled power plant proposed for the Latrobe Valley has breached the terms of a funding deal and should be stripped of a $100 million federal grant, the Greens say.

Greens MP Adam Bandt will try to have Parliament debate a motion that the grant awarded to Melbourne company HRL in 2007 to build a plant using new coal gasification technology be withdrawn, and the money made available to renewable energy projects.

It comes as a Newspoll survey commissioned by Greenpeace found two-thirds of Victorians supported reallocating the $100 million earmarked for the HRL plant to support renewable energy.

Initially planned to start operating at Morwell in 2009, HRL's proposal for a demonstration-scale plant has had several delays.

The Saturday Age revealed in May that the four major banks had rejected funding it, raising doubts about its viability.

Mr Bandt said it was incredible that the government was still considering funding a plant with significant greenhouse gas emissions during a national debate on carbon pricing.

''It is clear the HRL coal-fired plant is in deep financial trouble and may not meet the conditions precedent stipulated in the contracts,'' he said.

''The government should rapidly resolve this issue and make clear the funding will not go ahead.''

Energy and Resources Minister Martin Ferguson said the government would consider the Greens' motion if it was listed for debate, but signalled it would not support it.

''Mr Bandt's motion effectively calls on the government to abandon proper process and walk away from its obligations under the existing HRL funding deed,'' he said.

''The government has no intention of doing this and will continue to treat the HRL grant with the same measure of good faith that we have shown all other grants … The Greens may be comfortable applying double standards and seeking to pick winners but the government certainly is not.''

HRL says its technology, developed through its subsidiary Dual Gas, would have about one-third less emissions than traditional brown coal power. The federal grant, awarded by the Howard government, and most of a $50 million state grant are contingent on the plant proving viable.

The company is challenging the Environment Protection Authority at the Victorian Civil and Administrative Tribunal after the EPA approved only a 300-megawatt plant – half the capacity HRL asked for. Environment groups opposing its development are also contesting the decision.

HRL could not be reached for comment yesterday.

Newspoll asked a sample of 600 Victorians whether the grant earmarked for a new brown coal and gas power station should be used to support renewable energy. Two-and-a-half times more people said yes than no.


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